The Koniambo Nickel metallurgical plant belonging to Glencore and Société minière du Sud Pacifique in New Caledonia.
theo rouby/Agence France-Presse/Getty Images
U.K. stocks were led lower on Thursday, as mining giant Glencore cut its dividend and the Bank of England warned the economic recovery would be slower than anticipated.
The central bank held interest rates steady and dented hopes of a rapid recovery with its updated economic forecasts on Thursday. The central bank said the U.K.’s economic slump in 2020 would be less severe than initially feared, but that the recovery in 2021 would be slower than its previous forecast. It now expected the U.K. economy to return to its precrisis size at the end of 2021, rather than the second half of next year.
The pound GBPUSD, +0.42% climbed 0.4% against the U.S. dollar as investors focused on the short-term positives. However, the internationally-exposed FTSE 100 UKX, -1.50% fell 1.4%, partly due to the stronger pound, and the more domestically-focused FTSE 250 MCX, -1.13% slipped 1.1% — both underperforming other major European indexes.
Glencore GLEN, -6.69% also contributed to the index’s slump, as the mining giant and commodities trader scrapped its 2020 dividend and posted a $2.6 billion net loss in the first half of the year. The loss was driven by impairments of $3.2 billion as a result of lower commodity prices amid the COVID-19 crisis.
Stocks in focus
ITV ITV, +2.92% shares slipped 3.8% lower, as the broadcaster’s pretax profits fell 93% in the first six months of 2020. The coronavirus pandemic hit advertising revenues and also forced the company to halt production.
Aviva AV, +4.29% stock climbed 3.5%, as the insurance giant reported a 12% drop in operating profit to £1.2 billion in the first half of the year. The company’s new chief executive Amanda Blanc unveiled a strategy to focus on its strongest businesses in the U.K., Ireland and Canada, and resumed dividend payments.
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